Negative equity could hit 1.7 million

According to recent figures around 1.7 million homeowners could be facing negative equity if the value of homes in the UK continues to fall at the same pace as it has been over recent months. The report claims that 1.7 million homeowners could be facing negative equity next year if this downward spiral continues.

The report comes from Standard and Poor, and one official from the group said things were set to continue in terms of falling house prices. He said: “The downward trend in UK house prices now seems well established, and we expect prices to continue falling in the near term.”

There are some groups that have been placed at higher risk when it comes to falling into negative equity, and this includes those that have recently purchased their home, those that took out a 100% mortgage and have little or no equity in the home, buy to let borrowers, and also those that borrowed from sub-prime lenders.

Predictions have also been made by a number of other industry officials, with some claiming that the number of homeowners facing negative equity could rise to over two million if house prices fall by 20% by 2010, as some have predicted that they will.